Friday, January 01, 2016

George Osborne - The Bankers' Toady

George
Osborne is facing serious accusations of forcing financial regulators to abandon
a review into Britain's banking culture, while under pressure from the banking industry's
biggest names.

The
Chancellor is "bowing" to demands to drop the so-called "banker
bashing" probe set up after the Libor rate-rigging scandal, it is now
being claimed.

The
Financial Conduct Authority (FCA) has announced it will instead "engage
individually with firms to encourage their delivery of cultural change".

What a
complete load of absolute utter drivel – what a pile of hyper wabble-babble!

“...Engaging...
to encourage the delivery of cultural change...”

What on
earth does that mean? What kind of weasel-worded, double-speak bollocks is this,
and more importantly, wtf believes it?

Banks are
operated like Mafia families, they are organised criminal entities, by their
very definition. The culture of the banks is entirely criminogenic – they have
very strong criminal tendencies and they will purposefully ignore or break any law
which gets in the way of their making more and bigger profits.

The truth
is that the bankers have got hold of Osborne, (who doesn’t need much
persuading) and they have bullied him shamelessly into believing that they
would relocate their base of operations elsewhere if the pressure on them to
come clean got too strong.

Instead
of putting them to their threat, Osborne (who likes bankers and who wants to
believe them) has rolled over.

The
decision comes after FCA chief executive Martin Wheatley announced, back in
July, his decision to quit the post as Mr Osborne refused to renew his
contract, which was due to end in March this year. Wheatley was beginning to
make his demands heard and understood and he was dishing out some very strong
penalties. The banks didn’t like it or him, and they lobbied Osborne to get rid
of him.

MPs have
already suggested the Chancellor was behind this decision to drop the review,
months after it was set up.

Labour's
John Mann, who sits on the Treasury select committee, said : "George
Osborne is behind it, without any question.

"The
cultural issues are what lay at the heart of the financial crisis. It's
fundamental. Individuals took irrational risks with other people's money.

Well,
yes, but they also stole a whole heap of it as well!

"This
decision leaves us hugely exposed into the future because it allows the banks
to continue to go on acting as they acted before."

He added:
"George Osborne is bowing to pressure from the banks. HSBC and Barclays
have threatened to leave the country."

Conservative
Mark Garnier, who also sits on the committee, said he was" .disappointed..." by the decision.

He told
BBC Radio 4's Today programme: "There has always been this great argument
that perhaps the Treasury is having more influence over the regulator than
perhaps it ought to and certainly, if I was looking for a Machiavellian plot
behind what's happened here and the tone of the regulator, then I suppose I
would start looking at the Treasury."

Well, let
us review the facts, because what is becoming clearer is not just that George
Osborne is demonstrating his willingness to support the criminal banks, but is
also proving him to be someone who has a difficulty in determining the truth.

Back in February
2013, just when it mattered and in the wake of a major Parliamentary Review
which had attracted the attention of the whole world. the Chancellor made a speech
to J.P.Morgan, in which he announced that the UK's big banks would be broken up
if they failed to follow new rules to ring-fence risky investment operations
from High Street outlets.

He needed some
high-flown words to make it seem like he cared about bankig crime and that he
was serious about protecting the public, but his threats were never going to
happen.

The Chancellor
referred to the scandalous conduct of the UK banks in recent years and said
that the taxpayers were very angry at banks' behaviour and would never again be
expected to bail them out.

The Chancellor's
speech came on the same day the government introduced its Banking Reform Bill
in Parliament.

Mr Osborne also
said the banking system was not working for its customers, particularly small
businesses and individuals.

The Chancellor
appeared then to have accepted a major recommendation of an earlier
Parliamentary Commission on Banking Standards which called for a reserve power
to "electrify the ring-fence" if banks did not implement reforms.

The Ring-Fence:
The High Street activities of each UK bank were to be put into a separate
subsidiary from its riskier investment banking.

Well, that was distortion
number two. The big banks were not going to sit back and watch their flaky
wholesale arms dislocated from their retail cash cows!

Other mis-statements
include the requirement for bank directors to accept the responsibility for the
actions of their subordinates. Well, that provision recently got pulled as
well!

Electrification:
Regulators would be given the power to split up an individual bank altogether,
subject to certain conditions, if the regulator deemed that bank to be
undermining the purpose of the ring-fence. Regulators would also review the
entire UK banking industry each year to determine whether the ring-fence was
proving effective.

Deposit
Guarantees: The Financial Services Compensation Scheme currently guarantees up
to £85,000 of every deposit in a UK bank, although this will be reduced to
£75,000.

Under the bill, if a bank goes bust, the FSCS will be paid out ahead
of other people owed money by the bank. It means that the FSCS will be better
able to recover the money it has guaranteed, which should reduce the potential
bill for taxpayers if there is a shortfall.

Loss Absorbency:
The bill gives the Treasury the power to impose tougher requirements on banks
to increase their ability to absorb losses, in particular by requiring a bank
to borrow money from markets in a form that allows the bank to impose losses on
the lenders if it gets into trouble.

The Independent
Commission on Banking, led by Sir John Vickers in 2011, had concluded that
ring-fencing was the best way to protect "core" retail banking activities
from any future investment banking losses.

Osborne said in
his speech, at JP Morgan's administration offices in Bournemouth, that banks
had failed to take responsibility for their actions. The 2008 crisis, which
marked the start of the credit crunch, saw the government use £65bn of public
money propping up Royal Bank of Scotland and Lloyds Banking Group alone.

Osborne also
referred to greed and corruption over banks' rigging of the Libor interest
rate, and blamed recklessness by banks' so-called "casino operations"
for dragging the financial system to the brink of collapse. The reputation of
banks has been further undermined by scandals such as the fraudulent sale of
payment protection insurance and the rigging of the Libor interest rate.

The chairman of
the Parliamentary Commission on Banking Standards, Andrew Tyrie, warned the
banks could not be trusted: "Banks require discouragement from gaming the
rules. They will always try to do so unless strong disincentives are put in
place."

He said once the spotlight
had moved away from the banks, they would be likely to try to soften the
regime: "At that time, banks could be particularly active in testing the
ring-fence and lobbying politicians to alter its design for their benefit.
Electrification creates incentives against such behaviour."

Well, that was
then and this is now, and the banks have been assiduously lobbying good old
George to get him to relax these important measures. And George has done what
the banks have demanded, he has toadied to them shamelessly and has overseen
the dropping of any of the proposed measures.

Indeed, all the
provisions worth anything and announced in the aftermath of the findings of the
Parliamentary Commission on Banking Standards have been dropped or cancelled.

So how can anyone
believe a single word George Osborne says?

An enquiry into
banking culture was needed more now than at any time, but it is the last thing
the banks want to see being publicised.

Putting it as
simply as possible, banks exist to reward greed and cupidity. Bankers demand
and expect to be paid salaries and bonuses far beyond the dreams of avarice.
But paying these ludicrous sums of money does not make the recipients any more
worthy, they simply demand even more.

In order to
satisfy this level of greed banks have to find other ways of generating
revenues and profits, and the only real way in which they can do that is to
encourage an exponential level of unmanaged risk taking, and an unspoken
acknowledgement that criminal offences will have to be committed in order to
raise the profits.

To do that, they
employ middle management who are responsible for ensuring the lowest-level
workers maintain the through-put of profitability, and who are paid high levels
of remuneration. By far the largest percentage of that money is comprised of
bonuses achieved from the earnings generated by their direct reports, so each
manager has a fixed interest in looking the other way and not asking too many
awkward questions about the profits being made by his team members.

Such an atmosphere
generates a culture or a climate of ‘anomie’, or an ‘anomic’ environment,
within which ordinary rules, norms and behavioural determinants are routinely
ignored, and criminality is rewarded.

And when public
concern at this culture of criminality becomes too pronounced, then some form
of Parliamentary enquiry is announced, where the great and the good
pontificate, a lot of hot air is generated, lots of promises are made, and
proposals for change are tabled.

Then, when the
tumult and the shouting has died, George quietly rolls over when the bankers
threaten to take their toys away, and he gives in, allowing them to carry on
like before.

George Osborne is
presiding over an era where the reputation of the City of London has become
degraded and trashed because its importance to international criminals has
become greater than the Cayman Islands or any of the offshore, funny money
centres.

For some reason,
this man seems to feel that any kind of financial skulduggery can be permitted
within the Square Mile, and it will not have any shaming or deleterious effect.

There used to be a
time where Ministers of the Crown went to great lengths to at least give the
impression that they meant what they said, but now, as far as George, the
Bankers’ toady is concerned, he will promise to do one thing on one day, but as
soon as his friends in the Square Mile start bleating, he will back down.

And all the time,
the bankers continue to commit financial crimes.

We simply cannot
continue to have a man in charge of the UK economy who behaves in this cavalier
fashion.

Osborne is not a stupid
man, and he has an army of lawyers to advise him, if he did but want to know. A
man who connives in the commission of criminal offences, and who continues to
permit such activities to occur, in the full knowledge of what he is doing, is
as guilty of the crimes being committed as the person committing them.

He, as Chancellor,
is in a unique position of authority and responsibility, and he is aiding and
abetting these banking crimes, he is turning a blind eye to the provenance of
the criminal money flooding into London; and by his deliberate failure to take
positive action to legislate to help to prevent such crimes continuing to occur,
is evidencing his complicity in the criminal culture he is facilitating within
the banking world.

3 comments:

Another well articulated post to which I would like to add my pennyworth. The stench of dirty money gets ever closer to Westminster. The financial services minister (AKA minister for the City) brother in law has given £816,000 in various donations and gifts to the Tory Party and not received anything tangible in return See: http://www.dailymail.co.uk/news/article-2685294/Ministers-relative-gives-Tories-816-000-Labour-questions-donation-offshore-banker.html

A cynic might opine that it was only a gift from one Old Etonian to another but no one gives that much for a nil return - especially a hedge fund operator based in a tax haven. The gifts were before the Minister's appointment which may explain Osborne going soft on banking regulation though it seems a very cheap price to pay.

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!